Today's borrowers have many choices when it comes to getting an auto loan. And many loans no longer require a significant down payment, making it easier than ever to get the car you need. But even if you don't have to put down money in advance, is there an advantage to doing so? Yes. In fact, here are four big worries that a down payment can alleviate.
1. Worry About Your Debt Load
Financing a car is necessary but can be scary for some. You will, of course, rightly pay some interest in exchange for the credit. But if you are hesitant to finance due to the overall cost of the loan, remember that each dollar you put down up front will reduce your payments, the length of the loan, and the interest due. You may see the difference right from the start, but you'll definitely see it over time.
2. Worry About Being Upside Down
If something happens to the car, you'll generally receive a payment from your insurance company for what it's worth. If you haven't put any money down on the loan, this may not be enough to cover the loan. A slightly larger down payment helps ensure that you are never "upside down", owing more than the car is valued at.
3. Worry About Payments
Do you worry about making monthly payments? One way to reduce each month's obligation is to reduce the overall amount borrowed. This takes the pressure off your monthly budget by making payments more manageable. If something changes with your financial situation, you won't have as much to adjust in order to know your transportation needs are met.
4. Worry About High Rates
When you need to borrow less, you're likely to find that you have more options when loan shopping. Lenders look at your overall debt load as well as what you want to borrow. The smaller these are, the more they want to do business with you. And an appealing borrower can often find a better interest rate or easier payment terms.
Clearly, the advantages of putting up a down payment when you finance are many. Whether you want to save money or have more peace of mind, a down payment can take the worry out of the borrowing process. To learn more about what a down payment can do for you, meet with an auto loan lending service in your area today.
Share16 December 2019
I always wanted to buy my own home and after saving enough money for a down payment, I decided that it was time. Before I started looking at houses, I talked with a loan officer about financing. I wanted to know how much money I could borrow so I could look at houses in that price range. I was very happy after my meeting at the loan company and I was ready to start house hunting. My name is Jarod Spangler and I'm now a homeowner. If you have the dream of owning your own home, I think you'll find my blog of help to you. I've documented my journey of saving money, securing a loan and purchasing a house. To help you become a homeowner too, I'm offering advice and tips of things that I've learned along the way.
